How can we mitigate against future care costs ?
Q Our daughter and son have recently asked us to address the potential problem of my wife or myself (aged 66 and 75 respectively) needing to go into long-term care at some future point.
We agree, but don't have a clue what to do about it. We believe that there is a proposal by the present government to have a payment plan in place shortly, whereby, for a one-off payment of £8000, all costs would be covered. We, like many 'seniors', are reluctant for our lovely home to be used to finance any care and would much rather the family could benefit.
A A commission appointed by the coalition government is currently looking at the the future funding of social care and this will encompass paying for a care home place. The commission is due to report by July 2011, and has been told to consider a wide range of funding ideas including both voluntary insurance and partnership schemes.
The remit specifies that the commission should also look at 'how people should choose to protect their homes against the cost of care'. A considerable amount of work was carried out on this by the previous government, culminating in a White Paper, which was not conclusive on funding mechanisms, but did favour a partnership between the State and the individual to fairly share the cost of care. We can but wait for the coalition's decisions on this.
In the meantime, there are no insurance policies that you can purchase to mitigate future care costs. However, there are policies you can buy at the time care is needed. These are called 'Immediate Need Care Fee Payment Plans'. In return for a lump sum, they pay a regular income to the care home towards your fees for as long as care is needed. They are like insurance because the price you pay is based on the actuarial interpretation of your life expectancy, taking into account the disability or illness that necessitates your need for care. In other words, the older and sicker you are and the shorter your life expectancy, the lower the price.
Giving away your home or placing it in trust to avoid paying for care is not recommended and does not carry any guarantee that it would work. Read more about Immediate Need Care Fee Payment Plans.
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